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Officials Sketch Post-Sanctions Economic Outlook

Following the announcement of a landmark deal between Iran and world powers in Vienna, ministers and other senior administrative officials were quick to announce their predictions of the effect of lifting of sanctions on the economy and outline their priorities for reaping benefits and curbing risks in the post-sanctions atmosphere.

Iran and the P5+1 (the five permanent members of the UN Security Council plus Germany) reached a historic deal on Iran's nuclear program on Tuesday, which will grant Iran sanctions relief in exchange for certain limits on its nuclear program.

> Meeting Public Expectations

Minister of Economic Affairs and Finance Ali Tayyebnia praised the deal, emphasizing that it would not have been possible without the government’s “smart management of the economy” in the past two years, which curbed inflation and resulted in positive economic growth, IRNA reported.

He warned the authorities that the deal would give rise to public expectations; whereas in practice, “nothing has yet happened in the economic sphere.”

“It will take months before the terms of the agreement are finalized by all parties and the sanctions begin to roll back. This is while people will expect the deal to quickly alleviate all economic problems they have suffered over the past years as a result of the sanctions,” he said.

“On the other hand, even without the sanctions, the economy suffers from structural defects, such as low productivity, which must be addressed fervently to achieve economic prosperity,” the minister added.

> Access to Western Technology, Capital

The deal paves the way for investments by international companies who have long seen the Islamic Republic as an untapped market.

“The reduced western pressures on Iran would help boost trade while providing access to western technology and capital,” said Mehdi Karbasian, deputy minister of industries, mining and trade and head of the Iranian Mines and Mining Industries Development and Renovation Organization.

Recalling that the Iranian mining sector has received many offers from international companies over the past months, he said the inflow of foreign investments after the lifting of sanctions would help compensate some of the losses the sector has suffered over the past few years.

> Eliminating the Intermediaries

Chairman of Iran Chamber of Guilds Ali Fazeli also predicted economic reforms following the lifting of sanctions, noting that the sanctions removal would facilitate the opening of lines of credit, renovation of industrial machinery and expansion of international trade relations.

“Due to sanctions, domestic industries had to rely on various intermediaries for importing raw materials, which in turn increased their expenses. The sanctions’ removal would eliminate the need for intermediaries, enabling the industries to directly import the required material and modern technology,” he noted.

> Optimism for Job Market

Deputy Minister of Cooperative, Labor and Social Welfare, Abolhassan Firouzabadi expressed optimism about the country’s job market in the post-sanctions era, noting that many domestic industries have suffered from lack of liquidity and high cost of imports as a result of the western sanctions in recent years.

“Even during the sanctions, the highly educated and qualified Iranian labor force managed to win international contracts,” he said.

"However these deals were often canceled due to the Iranian companies’ inability to secure the required credit and banking insurance as a result of sanctions imposed on Iran’s financial institutions.

Western sanctions against Iran—targeting the country’s financial, transport and oil sectors—have been particularly devastating for domestic industries as sanctions on Iran’s financial sector, including the Central Bank of Iran, prevented the country from accessing global financial markets.

Even Iran’s main ports and shipping facilities were targeted, undermining the country's ability to conduct trade in basic commodities such as food and medicine. Not only did Iran struggle to collect payments for its shrinking oil exports, but up to $100 billion of Iranian overseas assets were suddenly out of reach.

> Blocked Financial Resources

Head of Management and Planning Organization, Mohammad Bagher Nobakht, said on Monday Iran’s frozen oil revenues in bank accounts around the world is only one part of the financial resources that have remained out of reach for Iran over the past years.

“The second part is the huge foreign investments which were promised to Iran but did not materialize as a result of sanctions. The amount of these resources is even more than the frozen oil income,” he stated.

Addressing a meeting of MPO’s committee in charge of preparing the sixth five-year economic development plan (2016-21), Nobakht said: “The 6th FYPD will be drafted in accordance with the post-sanction effects,” without elaborating.

> TCCIMA Plans

Chairman of Tehran Chamber of Commerce, Industries, Mines and Agriculture Masoud Khansari on Tuesday outlined the chamber’s short- and mid-term plans for the post-sanctions era in four major approaches.

Emphasizing the crucial role of the private sector in boosting international economic relations, he mentioned as the chamber’s first policy to provide consultation to various entities on international collaboration and means of absorbing foreign investments through such bodies as the recently formed Advisory Committee to Attract Foreign Investments After Sanctions. Enhancing the chamber’s relations with embassies and organizing joint meetings to help introduce investment opportunities in Iran are also part of the chamber’s policies in this regard.

TCCIMA’s second approach is aimed at identifying the bottlenecks and barriers to expanding businesses in the country. To this end, the chamber will provide various executive bodies and entities with technical reports on barriers to production. "If necessary, the chamber would also form joint committees with representatives from the executive bodies to come up with solutions to facilitate foreign investments after the removal of sanctions," Khansari said.

Thirdly, TCCIMA aims to organize meetings and expert panels with the participation of economists and academicians to come up with suitable strategies for the post-sanctions economy. The outcome of such discussions and expert panels would be drafted in the form of detailed reports and handed over to the executive bodies.

TCCIMA’s fourth approach for the post-sanctions era seeks to facilitate the transfer of knowledge on international laws, regulations and economic development concepts and international economic relations with the Iranian business community through organizing educational courses and joint seminars with international organizations.